The Reg A+ framework presents unique challenges and competitive advantages when compared to alternative offering options. Similarly to in an IPO, Reg A+ offerings must be qualified by the SEC. Perhaps most noteworthy is that securities sold in a Reg A+ offering are freely tradable and may be immediately quoted over-the-counter or listed on exchanges.
Regulation A+ is a securities exemption that allows both privately-owned and SEC reporting companies in the US and Canada to raise capital from investors with limited marketing restrictions. Some of the core features of a Reg A+ offering include:
The Reg A+ exemption is limited to issuers organized and with a principal place of business in the United States or Canada. Issuers subject to “bad actor” disqualification as defined under Regulation D pursuant to the Dodd-Frank Act in 2013 are not eligible to rely on the exemption. As of January 31, 2019, in addition to private companies meeting the criteria enumerated above, companies subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act may conduct Reg A+ offerings. There are further limitations on eligibility that should be examined with the support of counsel at the time of your initial consultation.
“Eligible securities” under the final rules for Reg A+ are limited to equity securities, debt securities, and debt securities convertible or exchangeable into equity interests, including any guarantees of such securities. Asset-backed securities are expressly excluded.
For Tier 2 offerings, there is an offering limit of up to $75M within the prior 12 months in equity, debt or convertible securities, but no more than $22.5M by selling security holders.
For Tier 1 offerings, there is an offering limit of up to $20M within the prior 12 months, but no more than $6M by selling security holders.
Issuers may generally solicit interest in a potential offering, both before and/or after the filing of the Form 1-A offering statement. Pursuant to the 2020 rule changes, issuers are permitted to put out “generic solicitation of interest materials” before identifying a specific exemption under which the securities are to be offered. Issuers are able to communicate either orally or in writing with potential investors to gauge public interest before commencing the offering. Sales are permitted after the Form 1-A is declared qualified by a “notice of qualification” by the Division of Corporation Finance within the SEC.
Tier 2 offerings are generally exempt from state blue sky registration and qualification requirements. Still, despite federal preemption, the securities sold in Tier 2 offerings are, in most states, subject to state dealer registration, filing of all offering materials, fees and issuer consent to service of process at the state level.
Tier 1 offerings continue to be subject to blue sky requirements, but should review the NASAA multi-state coordinated review program that may be able to help issuers expeditiously meet state standards of review.
While equity crowdfunding is being adopted as a viable method of raising capital in the US, this exemption does have its limitations and is not well-suited for all companies.
Some of the most practical considerations include:
We leverage our understanding of the JOBS Act, experience with Regulation A+ and relationships in the industry to quickly and effectively file your offering with the SEC for review and qualification. While there are risks associated with raising capital under any exemption, our firm understands and has experience handling these concerns. Our services include:
Our firm has strong connections with industry professionals who can provide services during your raise, including:
Along with supporting you while choosing the best service providers to achieve your goals, we'll also work with you on the following:
We have worked with Robin for almost a year now and it has been an incredible experience. Robin thinks outside the box, is very professional and extremely pleasant to work with. She is an expert in Regulation Crowdfunding and we are very satisfied with our choice to retain her. I would recommend Robin to any small start up. Robin is extremely qualified, reliable, and very cool!
Patricia Hertling, Co-Founder
Robin and her team were extremely knowledgeable about the evolving legal requirements around crowdfunding. The entire team was responsive and professional throughout our campaign. The team answers questions in a thorough and efficient manner which made it a cost-effective relationship for our small business.
Carlos Ventura, CEO
FEAST & FETTLE
Robin has the insight and compassion that is needed for any startup working to raise capital or manage the legal aspects of their business. She is not just an attorney but also a business women who will elegantly guide owners or decision makers to make the best possible legal decisions. She will actively understand your business, pursue various options and connect with outside resources in-order to help her client fully understand all their legal option. She is passionately focused on making sure her clients make the best possible decisions that will positively impact their business for both the short & long term.
Sandra Gault, Founder and CEO
We had the pleasure of working with Robin and her team to conduct our legal review for our crowdfunding campaign with Indiegogo and MicroVentures. We had been through the Reg D process before, but Reg CF was entirely new to us. Robin and her team were great in explaining the process and meeting our rushed deadlines to get everything ready. I highly recommend that anyone considering an equity crowdfunding campaign use Robin as their legal team.
Sunny Washington, CEO
The process of raising capital for any startup or early stage company is fraught with complexity, challenges and details that are often largely outside of the regular day-to-day activities of the organization. In addition to this reality, the process can be demoralizing, time consuming and very expensive. In contrast, our experience with the Reg CF process, while requiring real work and preparation, has been cost effective and efficient. A huge part of that was the feedback and guidance of Robin Sosnow, Esq and her staff. Robin's legal review was detail-oriented and thorough while still fast. The back-and-forth surrounding our questions and the final review process seamless as well. I would not hesitate to recommend or hire Robin in the future.
Brendan Burns, CEO
STEPSTONE ARTS RESOURCES
Equity Crowdfunding is an exciting new frontier for entrepreneurs, but can be confusing and frustrating to navigate, even with an experienced partner. Robin and her team are experts in the space, and were critical partners for us in our journey. They were responsive when we needed them and thorough in their feedback, ensuring to the last detail that no mistakes no mistakes were made. If you’re thinking of embarking on an equity crowdfunding campaign, reach out to Robin sooner rather than later!
Jordan Schwartz, COO & Co-Founder
We worked with Robin and her team for our equity crowdfunding raise on Microventures.com. As a first-time crowdfunder, she helped me navigate the process and made sure all of my concerns were addressed. Robin went above and beyond my expectations -- especially when she hired our company and helped us promote our crowdfunding campaign to her audience! The best JOBS Act firm in the biz!
Nicholas China, CEO
Robin Sosnow was our attorney on our crowdfunding that we did with IndieGoGo/Microventures. We were under the gun to get things going quickly and I put the pressure on. Robin and her team were terrific. They explained an area that was new to me and got all the paperwork done in record time. I'd highly recommend them for this kind of work, they are the experts.
Michael Hoffman, CEO
We had the opportunity to work with Robin Sosnow, PLCC during our recent crowdfunding venture. Robin was very professional and explained the process in detail. Any time we had any questions Robin was available and prompt on her responses. Going through a crowdfunding process is very time consuming and requires a lot of documentation. With all the efforts that Robin put in place it made our job easier to obtain all the documentation and complete the process in a timely manner.
Christinia Marc, Administrative Manager
My company and I worked with Robin and her team on a rather complex equity crowdfunding launch. Robin clearly knows the JOBS act inside and out - and she and her team always went the extra mile to make sure everything was buttoned-up properly. She's an excellent attorney and I'll definitely be working with her again.
Paul Siedarski, CEO and Head of Product
Sosnow & Associates has been integral to us launching our crowdfunding platform, not just with their expertise but with meeting quick turnarounds for prompt regulatory responses. Couldn’t do it without you. Thank you!
Luiggi Pera, Miventure Cofounder & CRO
Robin Sosnow and Manuel Pesendorfer are 100% plugged into the new SEC rules for Regulation Crowdfunding and continue to advise our funding portal to maintain compliance and support our business. They are super-connected to top influencers in the equity crowdfunding ecosystem and always ready to make introductions. We highly recommend Sosnow & Associates, and they are also nice people to work with.
Bruce Virga, CEO